Christopher Ilitch, President and CEO, Ilitch Holdings, from left Tom Gores, Chairman and CEO, Platinum Equity and owner of Detroit Pistons and Detroit mayor Mike Duggan pose for a photograph after a press conference announcing the move of the Detroit Pistons to the Little Caesars Arena in Detroit at Cass Technical High School in Detroit on Tuesday, November 22, 2016.
Romain Blanquart/ Detroit Free Press
Romain Blanquart

Tom Gores, Chairman and CEO, Platinum Equity and owner of Detroit Pistons sits down for a press conference announcing the move of the Detroit Pistons to the Little Caesars Arena in Detroit at Cass Technical High School in Detroit on Tuesday, November 22, 2016.
Romain Blanquart/ Detroit Free Press
Romain Blanquart

Chris Ilitch, Ilitch Holdings, President and CEO, left, and Detroit Pistons owner Tom Gores shake hands at a news conference in Detroit, Tuesday, Nov. 22, 2016. The Pistons announced they will move downtown Detroit and begin playing at the new Little Caesars Arena, home of the Detroit Red Wings, starting next season. (AP Photo/Paul Sancya)
Paul Sancya, AP

Ethan Davidson, son of the late Detroit Pistons owner William Davidson salutes the audience after being recognized by Detroit Pistons owner Tom Gores during a press conference announcing the move of the Detroit Pistons to the Little Caesars Arena in Detroit at Cass Technical High School in Detroit on Tuesday, November 22, 2016.
Romain Blanquart/ Detroit Free Press
Romain Blanquart

Tom Gores, Chairman and CEO, Platinum Equity and owner of Detroit Pistons, third from left shakes hands with Christopher Ilitch, President and CEO, Ilitch Holdings, second from left, as Detroit mayor Mike Duggan, left and NBA commissioner Adam Silver look on during a press conference announcing the move of the Detroit Pistons to the Little Caesars Arena in Detroit at Cass Technical High School in Detroit on Tuesday, November 22, 2016.
Romain Blanquart/ Detroit Free Press
Romain Blanquart

Dignitaries pose for a group portrait after a press conference announcing the move of the Detroit Pistons to the Little Caesars Arena in Detroit at Cass Technical High School in Detroit on Tuesday, November 22, 2016.
Romain Blanquart/ Detroit Free Press
Romain Blanquart

A banner featuring the Detroit Pistons and Little Caesars Arena is shown attached to the Little Caesars Arena under construction in Detroit, Tuesday, Nov. 22, 2016. The Detroit Pistons have reached an agreement in principle with the city of Detroit and Olympia Entertainment for the team to move from the suburbs to downtown, according to a person with knowledge of the negotiations.
The person spoke on condition of anonymity Monday because there had been no formal announcement. Pistons owner Tom Gores is set to appear at a news conference Tuesday with Detroit Mayor Mike Duggan and Christopher Ilitch, president and CEO of Ilitch Holdings.
(Tanya Moutzalias/The Ann Arbor News-MLive.com Detroit via AP)
Tanya Moutzalias, AP

A banner featuring the Detroit Pistons hangs from Little Caesars Arena under construction in Detroit, Tuesday, Nov. 22, 2016. The Detroit Pistons have reached an agreement in principle with the city of Detroit and Olympia Entertainment for the team to move from the suburbs to downtown, according to a person with knowledge of the negotiations.
The person spoke on condition of anonymity Monday because there had been no formal announcement. Pistons owner Tom Gores is set to appear at a news conference Tuesday with Detroit Mayor Mike Duggan and Christopher Ilitch, president and CEO of Ilitch Holdings.
(Tanya Moutzalias/The Ann Arbor News-MLive.com Detroit via AP)
Tanya Moutzalias, AP

Christopher Ilitch, President and CEO, Ilitch Holdings, from left Tom Gores, Chairman and CEO, Platinum Equity and owner of Detroit Pistons and NBA commissioner Adam Silver talk during a press conference announcing the move of the Detroit Pistons to the Little Caesars Arena in Detroit at Cass Technical High School in Detroit on Tuesday, November 22, 2016.
Romain Blanquart/ Detroit Free Press
Romain Blanquart

Detroit mayor Mike Duggan, from left Christopher Ilitch, President and CEO, Ilitch Holdings, Tom Gores, Chairman and CEO, Platinum Equity and owner of Detroit Pistons and NBA commissioner Adam Silver talk during a press conference announcing the move of the Detroit Pistons to the Little Caesars Arena in Detroit at Cass Technical High School in Detroit on Tuesday, November 22, 2016.
Romain Blanquart/ Detroit Free Press
Romain Blanquart

Some are critical of process that brought team downtown to join Red Wings

A banner featuring the Detroit Pistons hangs from Little Caesars Arena under construction in Detroit, Tuesday, Nov. 22, 2016. The Detroit Pistons have reached an agreement in principle with the city of Detroit and Olympia Entertainment for the team to move from the suburbs to downtown, according to a person with knowledge of the negotiations.
The person spoke on condition of anonymity Monday because there had been no formal announcement. Pistons owner Tom Gores is set to appear at a news conference Tuesday with Detroit Mayor Mike Duggan and Christopher Ilitch, president and CEO of Ilitch Holdings.
(Tanya Moutzalias/The Ann Arbor News-MLive.com Detroit via AP)(Photo: Tanya Moutzalias, AP)

As a longtime Los Angeles resident, the Palace Sports & Entertainment vice chairman now readily admits he was doubtful that the opening of Staples Center in 1999 would somehow transform a desolate landscape of parking lots.

But the rise of retail and residential investment in downtown L.A. and a similar occurrence with the MCI Center (now Verizon Center) in the Chinatown neighborhood in Washington, D.C., in 1997 has convinced Tellem of the potential of Little Caesars Arena and the surrounding development to work similar magic in downtown Detroit.

And with the Detroit Pistons, who are housed under the PS&E umbrella, joining the Detroit Red Wings in the new building in the fall, Tellem and the organization he runs are eager to see the organization become part of the story of Detroit’s revitalization.

But there are some critical of the process that brought the Pistons downtown.

The issue is the memorandum of understanding between Pistons owner Tom Gores, Ilitch Holdings and the Detroit Downtown Development Authority, which earmarks $34.5 million to pay to retrofit the under-construction arena for NBA-compliant locker rooms, floor seating, TV lighting and other modifications to the original plan.

The understanding also says the Pistons will eventually move business operations and construct a new practice facility downtown in the near future.

The $34.5 million will be generated by refinancing and extending $250 million in public bonds previously issued to help pay for the arena’s construction.

The money is coming entirely from DDA funds, which are specifically available for infrastructure and economic development.

“Those dollars really aren’t going to us,” Tellem told the Free Press. “These were earmarked funds from the DDA for infrastructure and economic development and it’s being earmarked to have the arena comply with NBA standards.”

But the Staples Center and MCI Center were both built without city tax dollars, although both facilities have been subject to the private-public debate.

The use of a public dollars for sports and entertainment has become commonplace, but a chorus of criticism has come with it.

And although Olympia Development is sharing the construction costs with DDA, that hasn’t stopped some from criticizing the entire project, although the Pistons’ portion is a very small slice of the financial pie.

In a city that has only recently emerged from bankruptcy and is struggling in many areas — including public education — the entire thing is just bad optics for the critics.

Even for those who actually prefer the Pistons downtown.

“Unfortunately, as I looked at the details of the deal, there’s no reason why the Ilitch family and or Tom Gores, who are wealthy, who have vast resources, could not contribute to those costs without adding additional cost to the taxpayer of the city of Detroit and of the state of the Michigan,” local activist Robert Davis told the Free Press this past week.

Little Caesars Arena will become the new home of the Detroit Red Wings and the Detroit Pistons.(Photo: The District Detroit)

Happy day

After months of rumors, the Pistons, the city and the Ilitch organization announced just before Thanksgiving the basketball team would leave the Palace of Auburn Hills, its home for 29 seasons, to join the Red Wings in the new arena starting next season.

The news conference at an auditorium in Cass Tech, which overlooks the arena construction, had a festive mood.

Duggan, while cautioning work still remained, hailed the deal as bringing Detroit’s four professional sports franchises within walking distance of each other.

“In Denver, they got basketball and hockey and baseball downtown, and the Broncos play a mile outside,” Duggan said. “But who would believe, that it’s only the city of Detroit, now becoming one of the great entertainment cities in America, that has all four professional teams in their downtown area.”

It was the realization of months of negotiations between Tellem and the Ilitches.

Tellem was hired in June 2015 after many years as sports agent and was tasked with helping chart the organization’s direction.

Within a short period of time, the obvious option was looking to join the Red Wings’ venture.

It goes beyond playing games downtown, as the two entities are forming a partnership that includes the new arena and their respective concert venues.

Tellem declined to reveal the nature of the discussions with the city and the Ilitches, citing confidentiality concerns.

But when you consider the arena’s price tag is north of a half billion dollars, another $34.5 million could be seen as a small price to help further ensure the plan’s success.

The Pistons also agreed to a list of community benefits including paying $2.5 million over six years to repair 60 neighborhood basketball courts. They have committed to hire 51% of the construction workers involved in their work from among city residents, to donate $100,000 in job-training funds to the Detroit Employment Solutions Corp. workforce training organization, and to offer free youth basketball camps, clinics and other events. They also will donate 20,000 tickets per year to Detroit residents and youth.

“We’re not just playing our games there,” Tellem said. “We’re moving our offices. Our practice facility development will wind up being in excess of $50 (million) approaching $75 or more million dollars development in the city. A lot of that money will be going to Detroit employees and Detroit firms to do the building.

“We’re going to employ hundreds of people downtown, we’re going to be paying city income taxes where the city is going to get dollars every year. When you talk about the players’ (salaries), that will be significant income. So we’re going to be contributing in a lot of ways and the study we provided that was done by the University of Michigan, the economic impact we will have on the city will be in the hundreds of millions.”

A study commissioned by PS&E estimated the move will generate nearly $600 million in economic impact for the city and create more than 2,000 direct and indirect jobs.

Detroit Mayor Mike Duggan, left, shakes hands with Detroit Pistons owner Tom Gores, right, as Chris Ilitch, Ilitch Holdings, President and CEO, center looks on at a news conference in Detroit, Tuesday, Nov. 22, 2016. The Pistons announced they will move downtown Detroit and begin playing at the new Little Caesars Arena, home of the Detroit Red Wings, starting next season. (AP Photo/Paul Sancya)(Photo: Paul Sancya, AP)

The opposing view

Not all see it that way.

The deal has re-ignited transparency concerns with the DDA.

Davis filed a lawsuit in Wayne County Circuit Court that claims members of the DDA violated the state’s Open Meetings Act when they met privately right before a public vote.

The five members of the DDA’s finance committee met privately for four hours Nov. 22 to comb over the Pistons deal, according to the lawsuit. Later that day, after the finance committee’s discussions, the DDA’s full board approved the deal during a half-hour public meeting. The Cass Tech news conference followed.

DDA spokesman Bob Rossbach said in an e-mail to the Free Press at the time: “The Detroit Downtown Development Authority has not been officially notified of a lawsuit, and in general it does not comment on pending litigation. The DDA does reaffirm that, as it conducts its business, it meets all the requirements of the state of Michigan’s open meeting and other applicable laws.”

The process leads Davis to ask: “If it was such a great deal, why wasn’t this discussed in the open?”

And he questioned the effectiveness of the community benefits arrangements.

“Don’t get me wrong — having the increase of traffic and business in downtown Detroit is a great thing for the city, but at the same time, this is no disrespect to Mr. Gores and to those who are a part of the development team making this come to fruition, contributing … basketball courts in the neighborhoods aren’t enough …,” Davis said.

A former school board member in Highland Park, Davis was convicted in 2014 of embezzling $200,000 from the school district. He spent 10 months in jail.

What’s next?

The Detroit City Council will vote on whether to finalize the deal early this year. Members have publicly withheld judgment until they can see financial details.

Davis said he expects a significant presence from those opposing the deal at the next public airing.

Several outlets voiced concerns on the day of the announcement.

“If it’s reasonable, then they should have no trouble raising the money through private means,” said Michael LaFaive, director of the Morey Fiscal Policy Initiative at the Mackinac Center for Public Policy. “What is the opportunity cost to building these stadiums? Is it a library not funded? Is it a school underfunded?”

It’s not clear what happens without the council seal of approval.

But here’s a dose of reality: The Pistons are playing downtown next season.

Tellem told the Free Press that the lease agreement that will eventually be signed will be the same as the length of Olympia Development’s agreement with the DDA.

Based on the Free Press’ understanding of the deal, that agreement is for 35 seasons. Then Olympia has options to sign 12 five-year extensions.

The organization is in the process of clarifying the impact the move will have on current Palace season-ticket holders. A person with firsthand knowledge of the situation said the organization “is close” to a decision for the site for the practice facility.

There are two options: land around the arena or land in the Midtown area.

The saying goes rising tides lifts all boats.

“What the Ilitches are undertaking here, in this area, is more ambitious, is larger scale and I have no doubt — and that was part of what I was convinced in spending time with them — that this is going to work and with all the teams together in one area, with all the entertainment in one area, that this will be a sports and entertainment district second to none,” Tellem said in comparing the area to other places around the country.

Davis actually welcomes that and says downtown is “where they should have been all along.”

The issue is with how the DDA conducts its business and the cost to taxpayers. Davis says these questions should have been raised long before a shovel touched a speck of dirt along Cass Avenue.

“This is not anti-Pistons,” Davis said. “This goes to the true lack of transparency of the DDA and what they have failed to do in being accountable to the citizens of the city of Detroit. That’s the issue here — not the Pistons.

“I believe that Tom Gores and his team wouldn’t have any issue with any negotiations be held in a public forum because I believe Tom Gores and his organization are transparent and want to be transparent because it helps them succeed with the move to the city.”